9911796707
TMI Blog1943 (12) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... such income, without sharing in the appropriate burden of British taxation. Judicial dicta may be cited which point out that, however elaborate and artificial such methods may be, those who adopt them are "entitled" to do so. There is, of course, no doubt that they are within their legal rights, but that is no reason why their efforts, or those of the professional gentlemen who assist them in the matter, should be regarded as a commendable exercise of ingenuity or as a discharge of the duties of good citizenship. On the contrary one result of such methods, if they succeed, is of course to increase pro tanto the load of tax on the shoulders of the great body of good citizens who do not desire, or do not know how, to adopt these man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and of the language of the section. The arrangements, so far as relevant, can be summarised as follows. There existed in Rhodesia a partnership firm called John Mack & Co., which owned and worked an enterprise known as the Golden Valley Mine. Mr. Mack, who lived in Rhodesia, owned a one-third share. Four ladies, namely, the appellant's wife, her two daughters, and Mrs. Jane Johnson, owned the rest. On March 20, 1933, by an agreement of that date, these four ladies, being all at that time resident in the United Kingdom, sold as from April 1, 1932, their shares in the partnership to a limited company formed for the purpose and registered on the same date under the laws of Southern Rhodesia. The company was named the Latjohn Trust, Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust, Ltd. (see sub-section (3) of Section 18 of the Finance Act, 1936). The decisive question is whether the right by virtue of which she has this power to enjoy has been acquired by means of the sort of transfer to which Section 18 applies. Section 18 begins as follows: "For the purpose of preventing the avoiding by individuals ordinarily resident in the United Kingdom of liability to income-tax by means of transfers of assets by virtue or in consequence whereof, either alone or in conjunction with associated operations, income becomes payable to persons resident or domiciled out of the United Kingdom, it is hereby enacted as follows: (1) Where such an individual has by means of any such transfer either alone or in conjunction w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greatest clearness and precision the true view of the application of Section 18 to the facts of this case. Speaking for the Court of Appeal, Lord Greene declared his disagreement with the appellant's arguments and continued: The share of the profits of the partnership to which the company is entitled is that share which comes to it in accordance with the terms of the partnership. The company is entitled to call upon its partner to do whatever may be necessary, for example, by signing a cheque on the banking account of the partnership, to enable the company to obtain its share. In the partnership accounts the company's undrawn share of profits would appear as a debt owing to the company. If the profits were under the control of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of London Income Tax Commissioners v. Gibbs [1942] A.C. 402; 10 I.T.R. Suppl. 121 goes to show that the technical view of the nature of partnership in English law cannot always be taken in applying the law of income-tax. I move that the appeal be dismissed with costs. THE LORD CHANCELLOR.--My Lords, I am authorised by my noble and learned friends Lord Atkin and Lord Russell of Killowen to say that they concur in the opinion which I have delivered. LORD THANKERTON.--I concur. LORD PORTER.--The conclusion which your Lordships have to reach in this case depends upon the construction and effect of Section 18 of the Finance Act of 1936. That section and the facts upon which its provisions must operate in the circumstances under considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nership or the partners individually in order to recover partnership assets, yet, as the Master of the Rolls points out, he has at his disposal means whereby he can ensure that his share reaches his hands. In such circumstances it seems to me that the word "payable" is appropriately used and accurately conveys the process by which the income finds its way into the pocket of the individual. It would, I think, not inaccurately be des- cribed as having been paid to him out of the partnership funds. The appellants, however, sought to support their argument by the suggestion, that, though Cases 1 and 2 of Schedule D have provided appropriate machinery for calculating what the profit of a business is, no such machinery exists in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
